Public Accounts Committee on June 16th, 2009

[The Chair, Liberal, Shawn Murphy]

I'd like to call the meeting to order. Welcome, everyone. Bienvenue.

This afternoon, colleagues, this meeting is broken in two. The first hour will be devoted to hearing from the two representatives from the Treasury Board Secretariat. We're very pleased to have them here. We welcome Mr. Rod Monette, the Comptroller General of Canada, and Mr. Bill Matthews, the Acting Assistant Comptroller General. Both Mr. Monette and Mr. Matthews have been before the committee many times previously, so again we want to welcome them here today. They are going to be here to address the committee's motion on vote 35.

At the end of an hour we're going in camera and we'll deal with two reports. The first one is “National Security”, and then we'll do “Managing Risks to Canada's Plant Resources”.

Before I turn the meeting over to Mr. Monette for his opening remarks, what I'd like to do is spend a minute approving the minutes of the steering committee meeting that was held earlier today. Those minutes are in front of you.

The two items are about the future work plan of the committee. One of the relevant dates, of course, is Thursday. We have Public Works and Government Services Canada for one hour on each of two subjects. The first hour is to deal with the audio cassettes and their refusal to provide the audio cassettes in their unaltered state, and then we have the procurement process.

As for the one on June 23, whether or not that meeting will take place is anyone's guess. We have Natural Resources Canada. And then the clerk has also in the schedule given some tentative dates for September, coming back here Monday, September 21. The Natural Resources meeting will mostly likely be moved to September 21. You can see a draft. This is only a draft form, but this is to get it going so that the clerk has something to work with over the summer months in order to get the last two weeks in September and most of October scheduled before we come back.

The other item on the steering committee is an annual event, colleagues, that comes up each year. It arises from a request from the Comptroller General to waive the publication of actual details related to certain ex gratia payments. That comes up every year, and there are different reasons for this, whether it's payments to people with HIV or they're too long, but that was considered by the steering committee and approved this morning, subject of course to this committee.

Those are the minutes. The chair would entertain a motion for the acceptance of the schedule.

Mr. Christopherson.

Do you have any further discussion or questions?

(Motion agreed to)

Thank you very much.

Now we're going to move right into vote 35.

I understand, Mr. Monette, you have an opening statement. You seem to be an awful distance away there today, I can hardly see you down there.

The clerk tells me that this has been set up for the joint committee of finance and industry. As a result, it's much larger, and it's not what we're used to. I take it that it's you down there, so we're going to trust that.

Mr. Monette, the floor is yours.

[Rod Monette, Comptroller General of Canada, Treasury Board Secretariat]

Thank you, Mr. Chair and members of the committee. Thank you for the opportunity to appear today to discuss your motion of May 14.

Let me begin by reiterating my respect for this committee and for the work that you do. Mr. Chair, I believe strongly in being helpful and responsive in support of this committee’s work. I would like to provide an explanation to the committee in two areas: how a central vote like vote 35 works, and what my role is in relation to reporting financial information.

Vote 35 is a central vote. Central votes include funding required across government for a specific purpose, but which cannot be included in a specific department or agency since the requirements by each organization are not known at the time of tabling the estimates.

The wording of the vote specifies the purpose and the conditions under which the funds may be used. In the case of Vote 35 for Budget Implementation Initiatives, as is the case for all central vote allocations, Treasury Board must approve the allocation of the funds to departments and agencies.

As I noted in my correspondence to you, Mr. Chair, no expenditures are actually charged to vote 35. Rather, this vote is used to move funds to departmental votes in support of the economic action plan. It is these departmental votes that expenditures are actually charged against. In other words, it is the individual departments that track the actual expenditure information. Vote 35 was created to provide departments with the funds they need to move forward quickly with economic action plan initiatives before the normal supply period.

Under the supply process, Parliament normally approves funding for budget initiatives through supplementary estimates in the supply periods ending June 23, December 10, and March 26. Authority to allocate funds from vote 35 expires on June 30, because we are now into the regular supply process. In essence, vote 35 provides bridge funding to top up departmental votes used in the delivery of programs and spending of funds.

As Comptroller General, my focus has been to work with chief financial officers and chief audit executives to ensure that the right accountability mechanisms are in place.

With respect to the economic action plan, this includes ensuring that the right audit, financial control, and risk frameworks are in place.

As you know, my office prepares the Public Accounts of Canada, which provide the full and detailed accounting of expenditures on an annual basis. Our system is generally designed to provide monthly reporting. Reporting of expenditures is done at the departmental level so that deputy heads and managers can manage their budgets. The Fiscal Monitor, prepared by the Department of Finance, does present the government's expenses at the whole-of-government level approximately 50 days after the end of any given month.

I realize this is a complex process and I would be pleased to explain it in greater detail, if you wish.

The best information available at this time relevant to the motion is how much has been allocated to departmental votes from vote 35.

What I provided to the committee on May 22 was a list of programs in a number of departments that were topped up by Vote 35 as of April 30. This was reported to Parliament through the Supplementary Estimates (A).

Although my office does not produce these reports, I do have an updated list—which Bill Matthews has—that's current as of May 31 and published on June 11. I would be pleased to share it with you.

With the assistance of my colleague Bill Matthews, I am prepared to answer any further questions you may have.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Monette.

We are going to go to the first round of five minutes each. We are going to try to keep this to an hour, colleagues, so I'm going to ask all members to keep your questions short and to the point, and I'd ask Mr. Monette and Mr. Matthews to keep their answers relevant to the question. If members elect to go for a two- to three-minute rant and then load up with three questions, I'm going to cut it off at the time.

Ms. Ratansi, you have five minutes.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you for being here.

I have very specific questions for clarification purposes.

You say there was a specific need for vote 35. That was fine; it was to be used to stimulate the economy within 120 days. As you are the chief accounting officer, I'd like to ask you the following questions: what were the parameters used to allocate the $1.8 billion you have in the supplementary estimates (A); and what was the process used and due diligence exercised in selecting these departments and programs?

In terms of value for money, I'm just looking at the stimulus. So if we could go to page 3 of your supplementary estimates (A) and look at the Canada Revenue Agency and Canadian Institutes of Health Research, could you give me an idea of how the allocation of these moneys would have stimulated jobs or the economy?

Thank you.

[Rod Monette]

Thank you very much for that question, Madam Ratansi.

The due diligence started with Treasury Board, the actual cabinet committee there, which approved the terms and conditions. That means all of the eligibility criteria for the budget initiatives.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

What were the eligibility criteria? If you don't have them, could you supply them to us? I don't need them now, if you don't have them.

[Rod Monette]

It would depend on the various programs, or whatever the programs were. For example, if it were an infrastructure program, it would say who could do those particular projects. That would be the first step.

Once those program terms and conditions are satisfied, the next step is for the chief financial officers and audit executives in every department to ensure they have put in place review mechanisms and to ensure that the documentation is processed, so that people are actually signing off and putting in place the right documentation for all of the decisions made.

Vote 35 was really to bridge a time gap between April 1 and the end of June. So the chief financial officers would look at their cash requirements and then have to sign off on a statement saying they had a cash requirement for that period. They would then submit that to the Treasury Board. That would also require full approval by the Treasury Board cabinet committee, and it would go through our normal vetting process; we would have analysts look at it and so forth.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Specifically, for the Canada Revenue Agency and the Canadian Institutes of Health Research, there's $8.5 million and $6.9 million. Could you help me understand this? I was supposed to stimulate the economy. I understand it was bridge financing, and I am fine with that, but the purpose was to stimulate the economy and to create jobs. I'm just at a loss to see these allocations. I listened to what you were saying about terms and conditions, and I can't seem to reconcile the two.

[Rod Monette]

Thank you.

I must say I'm not an expert on those particular programs, and--

[Yasmin Ratansi, Liberal, Don Valley East, ON]

I wouldn't mind if you could send a written response to us later. That's fine.

[Rod Monette]

I would be pleased to do so.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

I have another one.

How much of the money that you have allocated do you know has been drawn down? I understand you have a financial management reporting system that can tell you what departments can draw down on. Could you tell me if anything has been drawn down on that $3 billion?

[Rod Monette]

That exact question I can't answer, because the financial systems in the departments collect that information. Although we do have a Receiver General for Canada who collects summary information, the coding for those expenditures is in the departments, so it's the chief financial officers in the departments who would have that information.

What I can tell you is that they've all signed off on the fact that they do need that cash and that they need that money.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

When will it roll up? When it is utilized, will it roll up to the main financial system? Once the departments utilize the money, expense it, will it then flow right into your central financial system?

[Rod Monette]

Actually, in most cases it won't, and I'll have to explain why.

The reason is a bit technical. The coding in the system is like putting a flag on the expenditure to say that it is a budget expenditure. You don't normally put those flags in the government's big system for something that's going to last a year or two, because it's a significant machinery change. That exists at the departmental level, in their systems, so you need to take the departmental information and then roll it up, almost through a manual process, to get that information.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Then I have a last question for you. Out of the 2008-09 budget, would you know how much lapsed, and would you be able to give it to us by department? How much was lapsed and sent to the consolidated revenue fund?

[Rod Monette]

I don't have that information in my office. There's an expenditure report that's prepared by the expenditure management group at Treasury Board Secretariat. They prepare that information. To my knowledge--and correct me if I'm wrong, Bill--I don't believe that report has been prepared at this point.

[Bill Matthews, Acting Assistant Comptroller General, Financial Management and Analysis Sector, Treasury Board Secretariat]

No, you're right.

I'll add a couple of clarifications on that point. The financial results--including spending by departments against appropriations, which then drives your lapsed number--get finalized over the summer. We're in the process of having the books closed and audited by the Auditor General, etc., so those numbers are not yet final. That's point number one.

I'd like to come back to your first question on the two items about economic stimulus that you mentioned from page 3 of the supplementary estimates. It's just a clarification about eligibility for vote 35. If you look at the wording of the vote, you'll see that any initiatives announced in the budget are eligible for this funding if a department feels that it needs the cash to get going.

The CRA example is around getting in place a new tax program related to the home renovation money. The department had a new initiative that was announced in the budget; the department came forward and said that they needed some money to get this work going, and that's the logic for it.

As long as it was a new initiative that was announced in the budget, there was not already authority for it, they couldn't manage with existing cash, and it was within the legal mandate of the department, they're eligible for vote 35. I just wanted to add that clarification for you.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Ms. Ratansi.

Madame Faille, vous disposez de cinq minutes.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

It is always difficult to be second when the first asks such specific questions.

Mr. Monette, we want to be able to see where the $3 billion that departments have just received goes. At certain times of the year, they are all required to report to us about their progress towards meeting the objectives that they have set for themselves.

Could you advise the committee on how best to measure the effectiveness of this initiative, which does not appear to be a normal one? I feel that, at present, the committee's objective is to follow the money, to make sure that the process works and that the specific measures produce results.

Departmental performance reports are perhaps not in your area, but they are in ours. So I would like to know if there is an understanding, or if we can have the expectation, that departments will report publicly on their use of the funds.

[Rod Monette]

Thank you very much, Ms. Faille.

Yes, absolutely. Departments must report on the effectiveness of their resources from the budget. Effectiveness reports are found in departmental performance reports. For example, if we want an idea of the effectiveness of the infrastructure program, we need to know that one or two departments use the majority of the program's funds. Given that the resources are concentrated in that way, it would be good to sit down with the representatives of those departments, here or in another committee, and ask them what their measures of effectiveness are. For the public accounts, Mr. Matthews is thinking of ways in which information on budget use can be clearly presented.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

So we would be well-advised wise to ask the departments that have received these extra funds if we can look at their performance reports.

Mr. Matthews.

[Bill Matthews]

I will give you more details about the public accounts, but I will do so in English, because it is a little technical.

If you think about the financial statements, you have three areas in which you can provide additional disclosure. You have something called subsequent events, which is for something that has happened after year-end but is still important enough to talk about. In years gone by, we've used it to disclose information on sale-leaseback transactions, etc. That's one opportunity.

We do have a note on significant transactions. If there has been a transaction or an event that's big enough to warrant separate discussion and disclosure in the financial statements, it gives the government the latitude to do that. In addition, volume 2 of the Public Accounts of Canada contains a full listing of allocations from central votes to departments. You will see that when the time comes around.

Finally, on top of all of the financial information in the Public Accounts of Canada, there's a section called “Financial Statements Discussion and Analysis”. It's the first section of the public accounts themselves. It often talks about the financial situation of the country, the results achieved, and the economic situation. That would be a good chance at a macro level to discuss that. That goes on top of the departmental performance reports, which you've already flagged.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

But this data is only available once the year is over. Is that correct?

Are there no management tools or reports that let us see the status at the moment?